JLL Capital Markets: 2021 marked a new record for net-lease transaction volume, which totaled $79.3B – up 39% over 2019 – and the Sun Belt leads the way.
NEW YORK – Driven by unprecedent demand for single-tenant assets, 2021 marked a new record for net-lease transaction volume, which totaled $79.3 billion and was up 39% over 2019 levels. Senior Managing Director Alex Sharrin, who is based out of JLL Capital Markets’ Miami office and is part of the firm’s Capital Markets net-lease team that focuses on private capital, anticipates that trend to continue, led by Sun Belt markets.
Liquidity for net-lease assets has reached historic highs in recent months, said Sharrin. Rising acquisition targets and mandates from traditional net-lease investors, coupled with new private and institutional capital entering the space, is expected to support continued momentum looking ahead to 2022.
The property sectors currently experiencing a boost in liquidity by net-lease demand includes industrial, retail and office. With a 75% increase over 2019, industrial leads the pack with $37.3 billion in transactions. Even though e-commerce leasing remains strong, logistics was the driving force for demand in 2021, which is expected to continue throughout 2022.
Net-leased retail volume totaled $18.3 billion in 2021, up 65% over 2019, driven by significant private capital activity. The sector saw a sharp recovery in occupier demand in the second half of 2021 and was particularly strong in Sun Belt markets, which is also true for the office sector. Leasing activity rebounded for office in recent quarters, and the Sun Belt markets are recovering faster than others.
We are seeing liquidity at all levels of the market, from single-asset sales below $10 million to platform sales exceeding several billion dollars with seemingly no upward limit, added Senior Managing Director Coler Yoakam, Net Lease Platform Leader for JLLs Capital Markets group. More capital is forming around our space every week representing both global and domestic capital and from a multitude of sources ranging from HNY to private equity, public REITs and institutions. The pace of capital formation in our space has been accelerating and shows no signs of abating.
While net-lease demand and the historic liquidity is a national trend, Sharrin, believes Florida is positioned perfectly to capitalize on this trend. Florida, and, specifically South Florida, has benefited from recent population migration trends to the state, resulting in demand for multi-housing, industrial, retail and office space. Companies like Elliott, Starwood and Icahn Enterprises all recently relocated to the Miami area, which JLL Research identified as one of the more stable markets for net-leased office occupancy levels.
The core effect of investors having the ability to enter new markets like South Florida and the rest of the Sun Belt states is increased velocity in net-lease transactions, added Sharrin, who recently relocated to Miami and was promoted. Net lease offers compelling yields and the versatility to supplement all types of investor portfolios. This means an ultra-liquid single-tenant space it’s a win-win for buyers and sellers alike.
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